Bokamoso | Higher Education Funding: Time for Leadership that Prioritises SA’s Youth

Images from Wednesday’s budget speech – Higher Education Minister Blade Nzimande and President Zuma sitting slumped in their seats inside while students clash with riot police outside – say it all.

This is a classic snapshot of our insider-outsider situation. Young people are the outsiders in SA today. If you think that is an exaggeration, consider our youth unemployment rate of 52%. That is over four times higher than the global and African average of 12%.

That didn’t come about by chance. And nor did the explosive student protests this week. Both came about because our government has consistently failed to prioritise opportunities for young people. The youth are being dealt a double blow: higher education gets less than its fair share of the national budget; and young people get less than their fair share of access to jobs.

This week, young people rose up and shouted: “What about us?” They are angry and they are frustrated and so they should be. It is the right question at the right time and I hope it makes the government wake up and give the right answer.

The right answer is: Higher Education is a top priority and will therefore receive a significantly larger share of our national budget, so that we increasingly realise our ideal: every qualifying student must have access to a university education, regardless of his or her ability to pay for it.

Higher Education is a top priority because it plays a critical role in reducing inequality and removing the racial biases in our society.

Students know this all too well and it is my hope that their collective action this week will serve to reverse the negative trends, both in education and in youth unemployment levels.

University funding

The students are trapped in a vicious cycle due primarily to the government’s under-funding of universities over the past twenty years, itself a result of skewed priorities and poor long-term planning.

Around the world, universities receive funding from 3 key sources: direct subsidies from the state, student fees, and fund-raising (known as third stream income).

All the basic costs of running a university need to be covered by the first two – state subsidies supplemented by student fees. (Income from fund-raising can be of enormous benefit, but it is generally inconsistent and unreliable – donors tend to be particular about where they want the funds to go.)

In the past twenty years, state subsidies have been both low by international standards (0.75% of GDP compared to a global average of 0.84%), and falling (from over R20 000 per student in 1994 to an equivalent of under R17 000 per student today).

It is therefore no surprise that student fees have gone up during that time. The only other option available to universities would be to continually cut costs, which would obviously compromise the quality of their offering, which would benefit neither students nor South Africa.

Through the National Student Financial Aid Scheme (NSFAS), the government also contributes about R9.5 billion for student loans. Once again, this is simply not enough. By the government’s own admission, the NSFAS budget can only accommodate half of the qualifying students – those whose families earn less than the threshold per year.

This is hopelessly inadequate, especially when one considers the “missing middle” students, whose families earn above the NSFAS threshold, but less than about R500 000, who would need at least a part-loan, since each student requires about R100 000 per year to cover tuition and living expenses.

Value for student fees

Not only are students, by way of rising fees, having to make up the government’s funding shortfall, but to add insult to injury, they are also getting less and less value for money.

The number of university students has doubled from almost half a million in 1994 to about a million today. Due to falling subsidies, universities have not been able to keep up with this increase, with the result that the number of students per permanent academic staff member has grown by 50%.

SA’s vicious cycle

And herein lies the vicious cycle. Insufficient state subsidy funding has forced universities to increase both their class sizes, and their fees. So students are increasingly paying higher fees for lower quality tuition. The direct result of this is frustration and anger, leading to the kind of protests we are seeing at universities across the country now.

The indirect result is that increasing student indebtedness together with a decreasing quality of tuition means poor students are less able to pay back their student loans after graduating, less able to convert their higher education into real gains for themselves and the economy, and therefore less able to contribute to tax revenue and thus the funding of higher education down the line.

The only way to break this vicious cycle is for higher education to get a significantly bigger slice of the national budget.

The government has not made the needs of young people a priority

Creating opportunity for young people is clearly not a priority for Higher Education Minister Blade Nzimande and his government. Allocating more budget to higher education requires a trade-off with other needs that government is apparently unwilling to make.

In its medium-term budget tabled on Wednesday, it failed to allocate more funding to higher education, but set aside R64 billion rand over the next three years for an already bloated public sector wage bill. The DA has also identified a number of other lower-priority items from which budget could be re-allocated to higher education.

By using existing Parliamentary mechanisms, the DA will fight to get government to re-allocate its spending, both in the short term to provide immediate relief, and in the long-term, so that we get onto the right trajectory going forwards.

DA solution: Short term funds for immediate relief

Right now, it would be possible to allocate another R3-4 billion to the state subsidy in order to enable universities to waive a fee increase, by:

  • reallocating R2 billion from the Vodacom sale to higher education, currently allocated to the BRICS bank;
  • cutting unnecessary expenditure, including
    • R720 million allocated to the Department of International Relations and Cooperation to offset the impact of the depreciation of the rand on foreign missions;
    • the additional R69.7 million allocated to VIP Protection Services in the medium-term budget;
    • R67 million allocated immediately for the preparatory work on the planned nuclear build, which the DA maintains should be abandoned;
  • and reallocating R1 billion from the skills levy. (According to Michael Sachs, head of the Treasury’s budget office, “the higher education and training system has significant resources” that can be reprioritized.)

DA solution: Long term funding to achieve the ideal

The total state subsidy to universities is currently R26.2 billion and must be increased to at least R30 billion in the very short term and to R40-50 billion in the next few years.

Furthermore, the government must double the NSFAS budget from R9.5 billion now to at least R20 billion in the next few years. (Needless to say, this budget needs to be managed by competent, honest individuals.)

Taken together, this means we need to come up with an extra R25-35 billion per year of additional funding, over the next few years. The DA believes we can achieve this by:

  • reducing the bloated public sector wage bill (which at R550 billion all in currently gets about half our national budget) by:
    • cutting back on salaries to superfluous departments;
    • reducing the wage increase from 7.25% to inflation of 6%;
    • linking salaries to performance;
    • and reducing the exorbitant cost of Zuma’s bloated cabinet, currently at R1.6 billion;
  • and cutting fruitless and wasteful expenditure as well as corruption.

Government’s double failure

Mr Nzimande represents our students in their battle for a bigger slice of the national budget. But instead of passionately fighting their side, he has thrown in the towel, putting the blame on universities and stating there is no more available funding.

His only two remedies have been:

  • to negotiate a 6% cap on fee increases, which in the absence of a subsidy increase means universities will be forced to compromise on quality;
  • and to establish yet another task team, even though the last task team already told him everything he needed to know in 2012.

The tragic reality right now is that even if the government comes up with all the necessary university funding, our young people are still going out into a hostile job market, which disproportionately denies them access. This is their next big fight, or should be.

ANC leaders have shown themselves to be uncaring, oblivious, asleep and out of touch. I hope that young people across the country will take the advice that Nelson Mandela gave us in 1994: “If the ANC does to you what the apartheid government did to you, then you must do to the ANC what you did to the apartheid government.”

Freedom without opportunity is not a freedom one can use.

Mmusi Maimane
DA Leader

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